firedoglake (CC BY-SA 2.0)
A sign at the 2012 Chicago Teachers Union strike.
Career Prep High School, a chain of charter schools operating in Ohio, excels in only one metric: profit. Its seven schools, with an average combined graduation rate of 37 percent, are run by FusionEd, a corporation headquartered in Provo, Utah.
Like many other for-profit operators, FusionEd runs charter schools that serve the most at-risk student populations—potential and current high school dropouts. Often situated in storefronts, their schools are designed for maximum profit with minimal performance expectations.
Early investors in the FusionEd included Sean McManus and Jason Schrock, who created and operated a chain of online charter schools in California called A3 that defrauded the state of more than $50 million in education funds. The pair invested $1.9 million in FusionEd, according to Voice of San Diego, to help fund the company’s acquisition of financially troubled for-profit charter school operations, including White Hat Management, which ran a now-defunct chain of charter schools notorious for high dropout rates.
FusionEd does not provide services like transportation or extracurriculars, and their accountability measures, such as test scores and graduation rates, are set at a low bar. By controlling all aspects of the school, including teacher hiring and supervision, these companies maximize their profits by paying low wages to staff. In 2023, the average salary for FusionEd’s teachers was less than half the state average.
FusionEd is not alone. The Network for Public Education (NPE) has identified 164 for-profit corporations that operate more than 1,400 charter schools. Many use intricate “sweeps contracts” that allow them to run every aspect of the school, from hiring and firing teachers to special education and disciplinary hearings. When NPE requested charter operator information from state agencies through a Freedom of Information request, some states claimed they had no operator information at all. Ohio is the only state that makes the operator contracts between for-profit and charter schools public.
Three for-profit operators (Academica, Charter Schools U.S.A., and National Heritage Academies) run more than one hundred schools; many operators run only one or two. But regardless of their scale of operations, a common practice among these companies is to protect their financial interests by setting up related corporations—such as real estate firms or nonprofit charter management organizations—to keep taxpayers in the dark regarding profit and spending.
The number of schools run by for-profit operators keeps growing, and in the 2021-2022 school year, more than one in five charter school students were educated in a for-profit run school.
Online charter schools, with high financial returns and low student outcomes, are especially attractive to profiteers—42 percent of the sector is for-profit, according to a 2022 U.S. Government Accountability Office (GAO) investigation. The GAO concluded that for-profit management “can pose heightened financial and programmatic risks to federal funds.”
The risk does not end with federal dollars. It also includes local taxpayer funds, as evidenced by the $14 million scam run by the owners of Epic Youth Services, the for-profit management company that ran an online charter empire in Oklahoma.
Real estate profiteering drives the large, national, for-profit brick-and-mortar chains, which include Academica, Charter Schools U.S.A., National Heritage Academies, and the rapidly expanding Accel Schools. These corporations construct, lease, or purchase school buildings via their real estate companies and then, as charter managers, lease the properties to the school they control at a price they set. When the time is ripe, they sell the schools, cashing in and forcing the taxpayers to decide whether to give up a school building they financed or repurchase the building’s mortgage.
For too long, these for-profit charter school corporations have been allowed to operate in the shadows, running schools as facades to sweep in federal and local taxpayer dollars. Whether they’re running fly-by-night storefront schools, low-quality online schools, or leasing their real estate to the charters they run, the point is to cash in on kids at taxpayers’ expense.
But, in early July, Congress finally began to take action by introducing the “Championing Honest and Responsible Transparency in Education Reform (CHARTER) Act,” which would shut off the tap that allows taxpayer funds to flow to the for-profit charter school industry. The CHARTER Act leverages the federal government’s primary streams of K-12 education funding—principally the Elementary and Secondary Education Act of 1965 (ESEA) and the Individuals with Disabilities Education Act (IDEA)—to ensure no federal funds made available under ESEA and IDEA are awarded to a charter school that enters into a contract with a for-profit entity for operating, overseeing, or managing the charter school.
Introduced by two champions of public education—Representatives Rosa DeLauro, Democrat of Connecticut, and Suzanne Bonamici, Democrat of Oregon—the CHARTER Act would bring further transparency to the charter sector, close loopholes that profiteers have exploited, and send more federal tax dollars to classrooms.
Certainly, even charter advocates and the parents who send their kids to these schools can agree that school operations that put profit-making ahead of the needs of children are not worthy of taxpayer support. The CHARTER Act is the sorely needed step to reform that practice.